Problem 10A-9 Applying Overhead; Overhead Variances [LO10-3, LO10-4] Chilczuk, S.A., of Gdansk, Poland, is a major producer of classic Polish sausage. The company uses a standard cost system to help control costs. Manufacturing overhead is applied to production on the basis of standard direct labor-hours. According to the company's planning budget, the following manufacturing overhead costs should be incurred at an activity level of 29,000 labor-hours (the denominator activity level): Variable manufacturing overhead cost $159,500 Fixed manufacturing overhead cost 217,500 Total manufacturing overhead cost $377,000 During the most recent year, the following operating results were recorded: Activity: Actual labor-hours worked 26.000 Standard labor-hours allowed for the actual output 27,000 Cost: Actual variable manufacturing overhead cost incurred $184,600 Actual fixed manufacturing overhead cost incurred $195, 750 At the end of the year, the company's Manufacturing Overhead account contained the following data: Actual Manufacturing Overhead 380, 350 Applied 29,350 351,000 Management would like to determine the cause of the $29,350 underapplied overhead. Required: 1. Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements. 2. Show how the $351,000 Applied figure in the Manufacturing Overhead account was computed. 3. Breakdown the $29,350 underapplied overhead into four components: (1) variable overhead rate variance, (2) variable overhead efficiency variance, (3) fixed overhead budget variance, and (4) fixed overhead volume variance. Complete this question by entering your answers in the tabs below